Fair Value Gaps as Potential Price-Imbalance Retests

Summary

The document introduces the fair value gap as a price imbalance visible across three consecutive candles when their ranges do not fully overlap. Traders may mark the resulting area as a possible return zone, expecting price to revisit and fill the imbalance before resuming its prior direction. The concept can inform prospective entry or exit planning.

The explanation is conceptual and does not specify exact candle rules, market conditions, or a method for measuring whether a gap has been filled. It provides no examples, backtest, or performance evidence, and does not establish that price will revisit the zone or continue in its previous direction. A practical strategy would need explicit signal definitions, risk controls, and testing across instruments and timeframes before the idea could be evaluated.

Key ideas

• A fair value gap describes incomplete overlap among the ranges of three consecutive candles.
• The gap is treated as a possible price-imbalance zone that may later be revisited.
• Traders may use a potential retest to plan entries or exits.
• The document provides no testing or precise operational rules, so the idea is not a validated trading signal.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.